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Just from a provider perspective not sure I hit all your points but, I tried. So this is FINCEN related, broker dealers have to have Customer Identification Programs (CIP) and do Customer Due Diligence (CDD)programs under the financial crimes regulations. There are carve outs for employee benefit plans from these rules, so technically individual participants don't need to be put through those programs, unless it happens to be a SEP or other IRA program. I assume the rationale is employer sponsored retirement plans have a lower incidence of Money Laundering and fraud? The BD would still need to do CIP and CDD for the entity setting up the plan. In my own experience no participant account can be established without enough information for tax-reporting. So essentials for that would be name, address, birthdate, and social security number. Without that an account couldn't be set up. An employer usually has this readily available and could establish accounts on behalf of the participants. Typically SDBA participants have a separate sign-in to validate an account for SDBA i.e. they have to go in and accept terms in order to trade on the platform. These are all e-signatures now, they don't do paper. There is always a money market or other cash equivalent account tied to an SDBA, they have to transfer from in order to trade. I think cash accounts are built in to SDBA programs. At least this is how Schwab and TRowe worked. Also I would note that if an account is created with bad information, and say a duplicate SSN is found and it is discovered, any funds in that account will usually be sent back to plan sponsor f/b/o the participant because the account information for account opening was not in good order. Good order is a condition precedent for opening an account in most contracts I have seen. One of the reasons recordkeepers and B/Ds don't want to open accounts without information is because, they (or their related entities) are often the "payor" for the purposes of the IRC and can be fined if they don't have enough information to withhold and report. The fines can be substantial. In sum, yes, the employer would have all the required information to open the account, and be able to initiate the opening, however, if a participant hasn't validated their account they would not be able to trade on the platform and funds would be held in a cash until they did and that could be forever in some cases.

ERISA’s supersedure of States’ laws makes it unnecessary for an employee-benefit plan’s administrator to know, or even consider, any State’s law. Section 514(b)(7)’s limited exception regarding a qualified domestic relations order or qualified medical child support order might call a plan’s administrator to read an order’s text, but one need not know the State’s or Tribe’s law underlying the order. ERISA § 206(d)(3) calls a plan’s administrator to follow only a QDRO that “clearly specifies” the necessary information and instructions. An order does not “clearly specify” if the plan’s administrator cannot determine the amount to pay to, or set aside for, the alternate payee from the order’s text alone.

Sorry, I did not read the entire monograph. What I did read focuses on an important matter that is not relevant to the question at hand in this thread. The latter part of the monograph may address the question of a specified dollar amount, so my apologies if I have unnecessarily jumped on the first part without acknowledging that the monograph gets around to what is relevant here. The monograph begins by focus on when the alternate payee’s interest is determined, usually as a function of some date relevant to the divorce, such as when the divorce is determined to be final. The examples relate to determining a percentage of the participants account as of that key date. That amount, with the presumption of crediting earnings and losses until the “segregation” date, which I have referred to as the date that the plan actually creates the alternate payees subaccount, needs to be preserved through the interim time before implementation under the plan to be able to give effect to the words of the domestic relations order and the intended economic value of what was awarded. An award of a specified dollar amount is outside of the considerations described in the beginning of the monograph. The specified amount is determined without respect to any particular historical date in our case. The order itself instructs the plan administrator to simply use that specified amount when the administrator establishes the subaccount, and then give credit for earnings and losses after that. That is a clear statement of the intent of the court and the parties, which should be the determining factor in implementation of the order, not some state law legal presumption that involves a determination of amount that is dependent on a particular date rather than a specified amount. And, while abstract notions of fairness would suggest that determining the value as of the divorce date is the “correct” approach, it is rational for the parties to pick a specified amount, that the alternate payee is entitled to receive as of the time the amount is established under the plan, without respect to what the financial markets have done between the date of divorce and the time the plan gets around to establishing the sub account and making the amount available for distribution. The parties may have intended to protect the alternate payee against losses, at the possible expense of foregoing interim gains. That is for the parties to decide or the court to determine if there is some contest. It is certainly improper for a plan fiduciary to try to look into the purposes and intents of a domestic relations order and override the terms of the order (citations omitted, but available, and that’s THE LAW).

A lot of bigger companies use onboarding/hr systems that guide people through filling out employment paperwork. And some of them have a very low paid demographic for whom a "blind" application of auto enrollment would result in a nightmare for clients. People making minimum wage have trouble paying for rent and groceries. How do we feel about a form with the following options (paraphrasing)? The point would be to get them to respond and make it easy for them to opt out. There are often language barriers and technology challenges, etc. By intialling here _____________,I confirm that the following statement applies to me: I understand the automatic enrollment provisions of the Plan and I do not wish to be automatically enrolled in payroll deduction contributions, nor to have my contributions automatically increased each year. If and when I decide to contribute to the Plan I will make an affirmative payroll deduction contribution election. If no election is made above you will be automatically enrolled in the Plan as described in the Automatic Contribuion Arrangement Notice.

Its fine to ask in an efficient and effective way for the employee’s choice, even if the invitation presumes the likely choice is the opt-out. What I suggest you and your clients consider is that the IRS might worry that the last sentence: “If no election is made above [that is, in the HRIS system], you will be automatically enrolled in the Plan as described in the Automatic Contribution Arrangement Notice.” Could be read to suggest that the only way an employee specifies her choice is in the HRIS system (and that she may not deliver her election by other means). Could be read to suggest that the employee, if onboarding, specifies her choice as an element of the onboarding (and lacks other ways to deliver her election). Could be read to suggest that the only choices are an election for no deferral or for the default deferral. Could be read to suggest that the new employee’s choice is concluded now, rather than by the end of the notice period. Even if the preceding EACA notice is perfect and even if there might be good arguments about why the HRIS screen does not interfere with anyone’s notice or election opportunities, one can imagine some IRS people evaluating the facts and circumstances differently. As I understand the purpose you described, it’s to use an available opportunity to capture a no-deferral election because the employer fears an employee who prefers no deferral might, without being prompted by the HRIS system, neglect to do an opt-out. To meet that purpose, the system’s collection of a no-deferral or opt-out election need not be irrevocable. An employee who in the HRIS system specifies an opt-out is unlikely, during the notice period, to change her election from an opt-out to an affirmative election specifying her (nonzero) elective-deferral percentage. And if an employee changes her mind, the employer can deal with it then. Your idea is good. Rather, it calls for a little attention to what the words say, possible meanings a reasonable reader could perceive, and how IRS people might assert possible reasons a particular notice and election regime didn’t exactly meet what tax law calls for. A little editing might make your way one that meets its purpose and helps avoid an IRS challenge. This is not advice to anyone.

EPCRS allows you to consider all amounts contributed by the participants to be excess allocations. To quote myself and my co-authors of the Plan Correction eSource on ERISApedia: Let’s suppose that the early entrants were predominantly HCEs or the plan sponsor doesn’t really want to include the affected employees—there is an alternative. The plan may treat the funds contributed to the plan by the early included employees as Excess Allocations. This means that the plan sponsor can correct the failure by distributing to the affected employees the elective deferrals they made to the plan, including earnings. Any employer money funded on behalf of such employees, and earnings thereon, should be forfeited, to be used in accordance with the terms of the plan. Having said this the 3% top heavy minimum for a new entrant cannot be that expensive. Is it worth the potentially bad employee reaction to return the funds to avoid the TH minimum? Just sayin'.

Gina makes some great points. In my day to day experience - if a sponsor or trustee on a small SDBA style plan is having trouble opening an account for a participant, they aren't doing it correctly. Since the account is owned by the plan/trust, the beneficiary of the trust (the participant) does not need to consent. If the participant's signature is required it isn't titled correctly, or the wrong type of account is being used. Plans with safe harbor non-elective or discretionary employer contributions utilize SDBA for participants all the time without their involvement. Some additional common issues I see: Only the participant has access to the account - their access should be secondary to the trustees'/plan The plan does not have access (or does not want access) to the account, statements etc, they consider it to be private to the participant (how do they do any accounting?!) Fee disclosures for the investments aren't robust or easy to read QDIA might not be chosen or utilized properly if the trustee has to manually invest the money, or the QDIA notice isn't done, or there is no QDIA Remittance of federal tax withholding on distributions - if not using an outside service, this can sometimes require a separate account to help facilitate and often isn't done correctly Trading restrictions aren't set up correctly, and things like trading on margin, or purchasing illiquid assets might occur that the plan did not intend to allow A different advisor is allowed to trade/manage each account, such as the participant's personal advisor for their account. This might create fiduciary issues, or even non-discrimination issues of the HCE are using their own advisors on their accounts that the NHCE don't have the same access Each participant is allowed to have their account wherever they want - some plans end up with accounts at 30 different places. How the deposits are remitted on time, I don't know. The plans grow to a size where the number of participants and accounts to track is cumbersome. A 7 person plan with SDBA, sure. A 62 person radiology practice with SDBA that have no easy consolidated reporting options or capabilities? Not so great. There are lots more I'm sure I'm missing. While I appreciate the amazing flexibility of brokerage accounts, small employers often do what they want without considering the legal, tax, practical issues of having them in their retirement plans. When done in a window that provides consolidated reporting and recordkeeping they can be amazing and easy to work with. When done correctly I have no issue with them.

The Erisa Outline Book always had a great Compensation Comparison Chart that should all of the pay elements included and excluded from the different compensation definitions. That's always my go to, at least for a starting point.

I have only ever seen fees to the QTA, I would not recommend a bankruptcy trustee be paid out of plan assets. Especially if they have an alternative way of being paid.

This happens all the time. I have never had the IRS follow up on a final EZ with $0 BOY assets.

The plan’s administrator might first evaluate whether the order is a qualified domestic relations order. To be a QDRO, an order must “clearly specif[y] . . . the amount . . . to be paid by the plan to each such alternate payee, or the manner in which such amount . . . is to be determined[.]” If an order sets an amount but also mentions a past “date of segregation” and does so without stating that the alternate payee neither benefits from nor is burdened by investment change after that date, that sets up an ambiguity. Or that two intelligent people read the order and are uncertain about what it provides or doesn’t might suggest an ambiguity. If the plan’s administrator has already instructed you that it found the order is a QDRO, require the administrator to instruct you about what amount to set aside for the alternate payee. If you use discretion and either the participant or the might-be alternate payee understands the order differently than you see it, you invite blowback and a liability exposure (even if small). This is not advice to anyone.

Let them know you'll be buying an annuity with a QJSA unless they can get you a finalized QDRO? They can't hold the Plan termination hostage by saying we don't have a QDRO 2 years on.

Or, if the participant and the spouse might still be spouses when the plan’s final distribution is to be paid or delivered, the plan’s administrator might want its lawyer’s advice about whether to obtain a qualified-joint-and-survivor annuity contract (for the portion of the participant’s account that is subject to the QJSA protection), interplead all claims and rights and petition for equitable relief in the Federal court for the district in which the plan is administered (or the Federal court the plan provides as the exclusive forum, if the plan so provides), and deliver the money (if any) and the annuity contract to that Federal court. But, as I imagine Kansas401k suspects, it might be simpler to help the divorcing persons get to conclusion and a QDRO before the plan’s final distribution. This is not advice to anyone.